As part of the Fed’s year-long review of its monetary policy strategy, tools and communications practices, the St. Louis Fed is assembling members of its six advisory councils, representing a geographically and industry-diverse group of stakeholders.

Building a Skilled Workforce for a Stronger Southern Economy

A new day has dawned in the South. No longer is a high school education and a willingness to work hard sufficient to secure a family-supporting job. In fact, the majority of all jobs in the U.S. labor market require some postsecondary education or training. To effectively compete in today’s marketplace, states must have skilled workforces.

For the southern U.S.—including states within the Eighth Federal Reserve District—this new environment requires a shift, according to a recent report co-authored by the Federal Reserve Banks of Atlanta and St. Louis and the National Skills Coalition. Economies once built on low-skill industries must now compete globally for jobs that require training beyond high school. Most of these jobs are middle-skill jobs, requiring education or training beyond high school but not a four-year college degree.

Across the South, there are not enough workers trained to fill middle-skill jobs. This skills gap hurts businesses that are not able to fill positions. It hurts states because the lack of skilled workers makes it challenging to attract and retain new businesses. And the skills gap hurts low-wage, low-skill workers who are not able to advance their careers and move into good, middle-skill jobs.

At a series of recent meetings in Little Rock, Ark., the St. Louis Fed and the National Skills Coalition highlighted how this middle-skill gap plays out in Arkansas. In presentations to community college leaders, members of the Little Rock Chamber of Commerce and a legislative task force on workforce education excellence, it was stated that nearly 60 percent of Arkansas’ jobs are middle-skill jobs while less than half of workers are trained to that level.

This middle-skill gap, however, isn’t insurmountable. As explained in the aforementioned Building a Skilled Workforce for a Stronger Southern Economy report, southern states could step up to the challenge of educating more of the region’s adults to close this gap. Focusing on grade school students alone won’t be enough to close the skills gap now. If each and every one of the South’s graduating high school students were to stay in the region and train for open jobs that require postsecondary education, there would still be unfilled positions.

Southern efforts to educate and train more of the region’s adults must include all adults, including people of color. More than four in 10 Southerners are people of color, and even in states like Arkansas where people of color make up a lower share of the population, their significance should not be understated. More than one in four Arkansas residents are people of color, and their growth rates eclipse those of the current majority. Moreover, people of color will make up the majority of the U.S. population by 2044.

To close their skills gaps, southern states must also address people’s barriers to work. The history, geography and policy decisions of the South help create obstacles that prevent people from working, building their skills and advancing their careers. These barriers include higher poverty rates, burdensome transportation costs, onerous child care costs, high incarceration rates and restrictive policies for previously incarcerated people. These obstacles can be even more daunting in rural areas, where there may be additional challenges like limited job openings and limited broadband service.

In our presentations across Arkansas, we heard from business executives, legislators and local leaders about how these barriers and more play out in the state. Significant poverty intensifies other challenges to education and training like high child-care costs. Additionally, the opioid crisis contributes to many adults not furthering their education, and some leaders in Arkansas’ rural areas fear “brain drain” while also identifying and promoting resident industries in need of skilled workers.

The Roadmap for Southern Skill Building

To help states address some of these barriers, close their skills gaps and realize economic improvement, the Building a Skilled Workforce for a Stronger Southern Economy report includes a roadmap of critical steps states may take. State policymakers could:

Use workforce development strategies, such as sector partnerships and work-based learning, as economic development tools capable of meeting industry needs.

Invest in communities to implement high-quality workforce development strategies at the local level.

Establish job-driven financial aid programs that are available to a wide range of students.

Form career pathways and include comprehensive supportive services that enable completion.

Create state data systems that provide accountability on how training programs are helping residents with diverse needs get skilled jobs.

State policymakers could also consider easing the path to implementing these steps by taking the following actions, which could help bring a broad set of stakeholders to the table to unite around a common plan for skills development:

Set a bold goal for increasing the number of adults trained for skilled jobs.

Create a cross-agency “skills cabinet,” and task agency leaders with working together to develop and implement a strategy for meeting a state’s postsecondary attainment goal for adults.

The Building a Skilled Workforce for a Stronger Southern Economy report also includes example policies from southern states illustrating each step of this roadmap, proving that these policy changes may be implemented in the region’s context. One example not included in the report but surfaced in preparation for the Little Rock presentations was the budding sector partnership in Sevier County, Ark. In Sevier County, the community college, judge’s office, rural development authority and county industrial board all pay the salary of the Sevier County economic development director, who has helped residents identify their goals for the county, including strengthening its workforce.

In conjunction with these efforts, the local community college has developed and launched an industrial maintenance institute to focus on filling the skills gap in industrial maintenance technologies. Local industries have helped to develop and fund the program designed to help high school and college students build the many different competencies needed to excel at industrial maintenance. The program is projected to produce over 50 graduates per year in the relatively high-wage field of industrial maintenance.

Over the next year, the National Skills Coalition will work intensely with partners in Georgia, North Carolina, Tennessee, Texas and Mississippi to lift up similar examples of smart policy in action and advance state policies that help workers and businesses in those states to get the skills they need to compete. In Tennessee in particular, the National Skills Coalition will identify policies that address the nonacademic and advising needs of working students so they can succeed in postsecondary training, as well as opportunities to promote apprenticeship, work-based learning and postsecondary training that responds to industry needs. Partner organizations include Complete Tennessee and the Nashville Chamber of Commerce. In Mississippi, the National Skills Coalition will discuss policies that help more parents build their skills while supporting their families by providing child care assistance to workers in pre-apprenticeship and apprenticeship programs. Partner organizations include the Mississippi Low-Income Child Care Initiative and the Moore Community House Women in Construction Program.

To help them thrive now and in the future, residents, businesses and state economies are counting on their leaders to adopt smart workforce development policies on the state level. Southern state leaders should examine and consider taking the necessary steps to meet this challenge and close their skills gaps.

Melissa Johnson is a senior state policy analyst with the National Skills Coalition.